Mount Saint Mary College in Newburgh, New York, is facing financial challenges as Fitch Ratings recently downgraded the institution to a BBB rating. This downgrade comes after years of financial deterioration due to declines in student enrollments. The college’s heavy reliance on enrollment for funding, with tuition and fees making up about 85% of its operating revenues, has made enrollment drops particularly impactful.
The institution attributed a drop in enrollment in 2023 to a cyberattack that occurred in late 2022. However, Fitch analysts pointed to broader challenges faced by Mount Saint Mary College, which draws heavily from surrounding regions such as the mid-Hudson, Long Island, and New York City areas. These areas are characterized by weak demographics and high competition from multiple private and lower-cost public options, making it difficult for the college to attract students.
Enrollment at Mount Saint Mary College has been on a downward trend, with a full-time equivalent enrollment of around 1,383 students for fall 2023, representing a 12% decline from fall 2022 and a 30% decrease from fall 2019. This decline in enrollment has put significant financial pressure on the institution, as its operating expenses continue to rise while tuition and fee revenues have declined.
In fiscal 2023, Mount Saint Mary College’s operating expenses amounted to $48.2 million, an increase of nearly 8% from the previous year. While revenue overall increased due to investment spending on operations, tuition and fee revenue declined by about 4.8%. This mismatch between rising costs and declining revenues has put the college in a challenging financial position.
Fitch’s downgrade from BBB+ to BBB indicates a relatively low risk of default but is a warning sign for the institution. The downgrade could potentially raise Mount Saint Mary College’s cost of borrowing in the future, although Fitch analysts have noted that there are no further debt issuances planned at the moment. The college currently owes about $46.6 million in bonds, with a maximum annual cost to service debt estimated at $4.6 million for 2026.
Despite these challenges, Mount Saint Mary College has one bright spot in its nursing undergraduate and graduate programs. These programs are reportedly the only ones in some local counties, providing a unique offering that could help attract students and generate revenue for the institution. However, the college will need to address broader enrollment and financial challenges to ensure its long-term sustainability.
The history of Mount Saint Mary College dates back to the mid-19th century, with a tradition rooted in Catholic values. In addition to recent enrollment and financial challenges, the institution faced internal issues in 2016 when its trustee board faced a no-confidence vote. Faculty members expressed concerns about shared governance, board interference in personnel matters, and a shift towards a more conservative Catholic philosophy.
In conclusion, Mount Saint Mary College’s recent credit downgrade by Fitch Ratings highlights the financial challenges faced by the institution. With declining enrollments, rising costs, and a competitive market, the college will need to make strategic decisions to ensure its financial sustainability. By addressing these challenges and leveraging its strengths, such as its unique nursing programs, Mount Saint Mary College can work towards a more stable financial future.
